The growing signs that Russia may pull out of the proposed
US$2.5 billion Sino-Russian crude oil pipeline has raised great
concern among the Chinese partners in the project.
Chinese oil company officials say they are keeping a close eye
on developments, but added that they would downplay worries to
prevent pushing the Kremlin too hard on the matter.
On Friday, Russian Energy Minister Igor Yusufov said Russia is
studying the construction of a US$5 billion to US$7 billion oil
pipeline to its Pacific coast to export East Siberian crude to the
United States and Asian customers, such as Japan.
The proposal, which is favored by Japan, conflicts with China's
earlier scheme to build a direct link from Angarsk in east Siberia
to Daqing in northeast China.
Chinese oil company officials said yesterday they have not
received any official announcement from the Russian side that the
Angarsk-Daqing project has been rejected.
"It is not the final decision by the Putin government," says an
official with the China
National Petroleum Corp. (CNPC), the Chinese company backing
the project and the nation's largest oil producer.
The official indicated that there is still room for the Chinese
government to lobby the Kremlin to stick with the Angarsk-Daqing
proposal.
Experts say that even if the Russian side finally decides to
bypass China and extend the pipeline to the Pacific coast, they
would not rule out the possibility that Russia may build a spur on
the trunk line to transport some of the crude to Daqing.
On Friday, Yusufov said China will have equal access to buy oil
in the area close to the port of Nakhodka, where the future
pipeline may terminate.
Experts warn that a collapse of the Sino-Russian pipeline
project would damage the relationship between the two neighboring
countries, both economically and politically. China had pinned high
hopes on the crude oil pipeline after the two countries signed a
non-bidding agreement for the project last March. The trunk line
would allow China to import 700 million tons of Russian crude
through the pipeline over the next 25 years.
The deal, worth US$150 billion in total, would be the
largest-ever trade arrangement between the two countries.
CNPC officials say that China should try harder to get the
Russian crude deal finalized, since the short transportation
distance makes economic sense.
But it should also prepare for the possible failure of the
agreement, they note.
Earlier this month, CNPC preliminarily agreed to buy 10 million
tons of oil annually for at least six years from OAO Yukos Oil Co.,
Russia's largest oil company.
"One of the signals we see behind the increased oil
transportation by rail is that the oil pipeline project may be
further delayed," says Li Fuchuan, a Russian oil expert with
Chinese Academy of Social Science.
Meanwhile, China is also mulling over possibly building a
similar crude oil pipeline from Kazakhstan to its western Xinjiang
Uygur Autonomous Region. Once completed, the 1,200-kilometer-long
pipeline would be able to deliver up to 20 million tons of crude to
western China annually.
The government is evaluating the economic feasibility of the
project, which is projected to be much more expensive than the
Russian crude plan.
Last year, China imported 5.3 million tons of Russian oil, a
jump of 73 percent year-on-year.
(China Daily February 24, 2004)